Accenture decreased its annual revenue and profit estimates and made the decision to eliminate around 2.5% of its staff, or 19,000 jobs. In fact, this is the latest indication that the deteriorating global economic picture was sapping corporate spending on IT services.
Furthermore, Accenture announced on Thursday that more than half of the positions to be eliminated will be in non-billable corporate tasks, which helped boost its stock by 6.4%.
However, due to a decline in demand brought on by high inflation and rising interest rates, the tech sector has been forced to lay off hundreds of thousands of workers since late last year.
Moreover, Competitor Cognizant Technology Solutions forecasted quarterly revenue below forecasts and referred last month to “muted” increase in bookings, or the agreements IT services businesses have in the works.
In addition, IBM Corp. and Tata Consultancy Services, the largest IT services provider in India, have also warned of Europe’s fragility, where the conflict in Ukraine has reduced consumer spending.
In contrast to its prior prediction of an increase of 8% to 11%, Accenture now anticipates yearly revenue growth to be between 8% and 10%.
As opposed to the previous range of $11.20 to $11.52, the estimated earnings per share are in the range of $10.84 to $11.06. Also, through fiscal 2023 and 2024, the business anticipates severance expenditures to total $1.2 billion.
In a post-earnings call, Chief Executive Julie Sweet remarked, “Companies remain focused on executing compressed transformations,” referring to how companies are attempting to become leaner in the unstable economy.
According to a US-based Enterprise Technology Research poll of more than 1,000 IT decision makers, they intend to slow the growth of their budgets by 2023. Currently, 3.4% growth is expected, down from a 5.6% gain recorded in October 2022.
According to the statistics, consulting businesses will face a very challenging climate in the near future, according to Erik Bradley, chief engagement strategist at the technology market research company.
